Oil prices fell on Wednesday as signs of rising crude inventories in the United States, the world’s largest crude consumer, fueled concerns about oversupply. However, sanctions imposed on oil flows from Russia are limiting price declines.
Brent crude futures fell 11 cents, or 0.2%, to $64.78 a barrel by 05:10 GMT, after gaining 1.1% in the previous session. WTI Crude futures fell 9 cents, or 0.2%, to $60.65 a barrel after rising 1.4% on Tuesday.
Data from the American Petroleum Institute (API) released late Tuesday indicated that U.S. crude and fuel oil inventories rose last week.
According to data, crude oil inventories increased by 4.45 million barrels in the week ending November 14, while gasoline inventories increased by 1.55 million barrels and distillate inventories by 577,000 barrels.
US sanctions imposed on major Russian producers Rosneft and Lukoil have given traders until November 21 to terminate their relationships with Russian companies.
The US Treasury Department said in a statement on Monday that the sanctions are restricting Russia’s oil revenues and are expected to reduce export volume over time. It emphasized that strong buyers of Russian oil, such as China and India, have already begun turning to alternative suppliers.
The market is facing downward pressure as sentiment about an oil oversupply, which is trying to rise due to the impending November 21 sanctions, continues to rise.
Prices rose on Tuesday as investors assessed the impact of US sanctions and Ukraine’s attacks on Russian refineries and export terminals fueled concerns about crude and fuel shortages.
Concerns about Russian supply are being weighed down by analysts’ predictions that oil production is exceeding current demand, which is weighing on prices.
Following Ukraine’s attacks on Russian energy and port infrastructure, diesel fuel production margins rose sharply in Europe, reaching their highest level since September 2023 on Tuesday. This comes alongside rising refinery margins globally.
Oil prices have been supported by the strong diesel market, but a persistent crude oil oversupply is keeping investors cautious about securing further gains in crude.
Official U.S. government inventory data will be released late on Wednesday. Analysts estimate that crude oil inventories decreased by an average of about 600,000 barrels in the week to November 14.